Company description: Amyris is a global renewable products company providing sustainable alternatives to a variety of non-renewable resources. Amyris uses its innovative bioscience technology to convert plant sugars into hydrocarbon molecules. Amyris creates ingredients and is commercializing its No Compromise products in the flavors and fragrances, cosmetics, specialty fluids, polymers, lubricants, and fuels industries. Amyris Brasil Ltda., a subsidiary of Amyris, oversees the establishment and expansion of Amyris\u2019s production in Brazil. More information about Amyris is available at www.amyris.com.<\/p>\n
Rankings<\/p>\n
50 Hottest Companies in Bioenergy: #11, 2014-15<\/p>\n
30 Hottest Companies in Renewable Chemicals: #3, 2014-15<\/p>\n
Awards<\/p>\n
Won Biofuels Digest\u2019s 2012 Special Editor\u2019s Award: Amyris, comeback of the year<\/p>\n
The Issues<\/p>\n
In November we wrote: \u201cWe have become so accustomed to receiving obituaries of Amyris that recently we wondered if the famous old saw in fact read, \u201cSend not to know for Whom the Bell Tolls, it Tolls for Amyris.\u201d It is therefore enough to startle the angels when the quarterly earnings roll in and we read that not only is Amyris alive and well, sales are up 177% for Q3 (compared to Q3 2013), the company is expanding to a second molecule, and expects \u201ccash payback on its Brotas plant\u201d by 2016.<\/p>\n
It is tempting to see the story of Amyris as one of unexpected redemption, a rescue from Hades effected by the miraculous intervention of Olympian gods, as if Orpheus had gone down to the underworld and rescued biobased farnesane from certain oblivion.<\/p>\n
But it probably is more of a mundane case of Chicken Littles amongst industry observers\u2014 the plant was not ready for prime-time when first launched, a gigantic learning curve was embarked on in the harsh light of public company reporting, and what we are seeing is success delayed, rather than the deliverance of a soul from the underworld. Turns out that Chicken Little, in looking at the 10-Ks and declaring that the sky was falling in, was wrong yet again.<\/p>\n
Now, if the company spent a considerable amount of time in the penalty box, that it understood \u2014 this market in these times is always happy to whack a technology stock that mistimes the forward projection of its arrival at break-even. There is little doubt that the Amyrisians up in Emeryville would like to have arrived in 2012 where they are today, and that they have been chopped up in the public markets for running the trains late.<\/p>\n
Markets and Molecules<\/p>\n
On the molecule front, Amyris is now selling, via its global distributor network, a second renewable ingredient under its Neossance brand. Neossance Hemisqualane is a pure, plant-derived, light emollient with high spreadability and proven performance characteristics. Amyris touts that \u201cthis ingredient addresses the mid-price emollient market with better performance and competitive pricing compared to existing products in this large and growing market.\u201d<\/p>\n
Chief Business Officer Zanna McFerson adds: \u201cBuilding on the success of our Neossance Squalane product, and after positive reaction from more than fifty customers who sampled our new hemisqualane product, we are expanding our Neossance portfolio of ingredients with another high performance solution for the cosmetics industry.\u201d<\/p>\n
Now, we\u2019ve written much about food vs. fuel \u2014 who hasn\u2019t? But there\u2019s been less written about \u201cface vs fuel\u201d which is to say, why are companies like Amyris that were supposed to make jet fuels and diesels on the road to massive impact on bottom line and society, making emollients?<\/p>\n
Keep in mind that squalane is a hydrocarbon, and a terpene \u2014 and if you visited ABLC Net this past week you would have received quite an earful regarding the bridge between flavorings, fragrances and high-performance fuels that exists in the world of terpenes. There must be more than 50,000 of them in nature \u2014 and when you are delighted by the fresh scent of Ponderosa Pine as you trek through California\u2019s natural wonderlands, you are in fact getting a whiff of terpenes. They are advantaged hydrocarbons, as well, when it comes to super-dense fuels \u2014 and farnesane, which is Amyris\u2019 primary pivot point, is already a source of fuels via its partnership with Total and we may well see some large-scale production of same before the end of the decade.<\/p>\n
But for now, Amyris is all about generating business, and as most of us holiday shoppers have observed, fragrances are selling at just a teency bit of a premium over diesel. Like $100 for 3.5 ounces, vs $3.50 a gallon.<\/p>\n
The Financial Analysts<\/p>\n
Cowen & Company\u2019s Jeff Osborne writes:<\/p>\n
\u201cAmyris reported strong operational improvements in 3Q. Product revenue of $11.5 mn was up 177% y\/y due to strong fragrance strains; however jet fuel sales appear to be ramping slowly due to regulatory delays. The company now expects to be cash flow positive in 2015 versus late 2014, due to a change in collaboration inflows. Brotas appears to be running well and cash cost is targeted at below $3\/L.<\/p>\n
He added: \u201cAmyris introduced a new farnesene strain at the Brotas refinery during the quarter, which should allow sub-$3\/L production costs. We were pleased to see the company transition from making high ASP fragrance oil to farnesene without any issues or elongated downtime. The plant has run smoothly for 3 months, which should allay some investor fears after an up down initial 15 months out of the gates.\u201d<\/p>\n
Looking forward, Cowen & Co expects: \u201cAbout $30 million of renewable product sales in 2014 and a doubling of that in 2015, with a cadence of $10 mn per qtr in 1H15 and $20 mn per quarter in 2H15, as 6 new molecules ramp. Management reiterated that Brotas will have reached a cash payback by early 2016 as the company focuses on maintaining a total cash gross margin structure over 60% Osborne warns: \u201cWe are keen to see how the company handles marketing 1 molecule in 1H14 to 2 currently to 8 by the end of next year. (aided by an ASP of ~$10\/L with gross costs below $3\/L).<\/p>\n
Raymond James\u2019s Pavel Molchanov writes:<\/p>\n
\u201cAfter a period of retooling while in the \u201coverpromise and underdeliver\u201d penalty box, 2013-2014 have been Amyris\u2019 first years with operations truly in commercial mode. There is visible scale-up progress, but the historical reliance on partner-based R&D payments makes quarterly financials choppy. In addition to updates on the production ramp-up at the Brotas plant, the market wants to see additional clarity on the pace at which Total will be scaling up its fuels joint venture with Amyris. We maintain our Market Perform rating.<\/p>\n
Molchanov highlights that expectations were \u201con\u201d for Amyris to reach break-even in late 2014 on a cash basis:<\/p>\n
\u201cThe clear-cut aim was for cash flow to finally turn positive in 2H14. Following 3Q\u2019s cash burn, the updated timeline is for this milestone to be reached not right away but rather on a full-year basis in 2015. Lower near-term collaboration inflows are the main culprit for the pushout. He adds: \u201cIt\u2019s worth noting that Amyris is deliberately running Brotas to avoid complications, particularly after the painful experience of 2011-2012. Margins are emphasized over volumes, and, as such, our model projects late 2015\/early 2016 for achieving full nameplate capacity at Brotas.\u201d<\/p>\n
On the recent downturn of stocks in the sector: \u201cThe stock has, of course, shown weakness amid the oil price selloff \u2013 as have essentially all other companies in the broad category of petroleum substitutes. As a sentiment trade, it\u2019s understandable, but as a practical matter, there is virtually no linkage between the prices of oil and farnesene\/squalane. The current focus for Amyris \u2013 and plenty of others in the bioindustrial space \u2013 is high-value materials rather than commodity fuels, and until Amyris establishes a meaningful footprint in the fuel market \u2013 unlikely until 2017 at the earliest \u2013 the direct read-through from oil prices for production economics is minimal.\u201d<\/p>\n
Major Investors<\/p>\n
Amyris\u2019s stock is traded publicly on the NASDAQ stock exchange under the symbol AMRS.<\/p>\n
Technology<\/p>\n
Amyris has developed genetic engineering technologies that enable modification of the way microbes process (i.e., metabolize) sugar. By controlling these metabolic pathways, Amyris is able to design microbes, primarily yeast, to be tiny living factories that convert plant-sourced sugars from crops such as sugarcane or sweet sorghum into target molecules. Using its industrial synthetic biology platform, Amyris develops yeast strains designed to produce a broad range of molecules. The first molecule that Amyris is focusing on is Biofene, Amyris-brand farnesene, a hydrocarbon building block that can replace petrochemicals in a wide variety of products in the cosmetics, flavors and fragrances, consumer product, polymers, lubricants and fuel markets.<\/p>\n
Feedstocks<\/p>\n
Amyris can use a broad range of plant sugars to produce its products. Amyris expects to scale production initially using Brazilian sugarcane as a feedstock.<\/p>\n
Products<\/p>\n
Renewable fuels, lubricants, polymers and plastic additives, consumer products, flavors & fragrances and cosmetics.<\/p>\n
Offtake partners<\/p>\n
As part of its go-to-market strategy capitalizing on the flexibility of its proprietary molecule, Amyris has entered a number of off-take and co-development agreements with partners in specific, high-value vertical markets such as cosmetics, consumer products, flavors and fragrances and lubricants. Amyris has an offtake agreement with Shell for the supply of Amyris No Compromise\u00ae diesel, with M&G Finanziaria S.R.L. to incorporate Biofene\u00ae<\/sup> as an ingredient into M&G PET processing and with The Procter & Gamble Company for use of Biofene in certain specialty chemical applications within P&G\u2019s products. Amyris also has co-development agreements with companies in a variety of markets, including with Total to develop renewable jet fuel and with Kuraray to develop polymers to replace petroleum-derived feedstock such as butadiene and isoprene, allowing Amyris to target high-value markets while ramping up production of renewable diesel.<\/p>\n Past Milestones<\/p>\n \u00b7 December 16, 2014: Amyris Renewable Jet Fuel Receives Regulatory Approval in Brazil<\/p>\n \u00b7 November 10, 2014: Amyris Launches Second Innovative and Renewable Ingredient for Cosmetics Industry<\/p>\n \u00b7 October 16, 2014: Amyris Receives Green Chemistry Innovation Award From U.S. Environmental Protection Agency<\/p>\n \u00b7 September 24, 2014: KLM picks Amyris-Total renewable jet fuel as climate takes center stage in NY and at the UN<\/p>\n \u00b7 September 9, 2014: Braskem Joins Amyris and Michelin to Accelerate the Industrialization and Commercialization of Renewable Isoprene<\/p>\n \u00b7 July 31, 2014: First International Commercial Flight Completed With Newly Approved Amyris-Total Aviation Biofuel<\/p>\n \u00b7 June 16, 2014: Total and Amyris Renewable Jet Fuel Ready for Use in Commercial Aviation<\/p>\n Future Milestones<\/p>\n 1. Build and operate two additional productions sites in Brazil (SMA and Paraiso).<\/p>\n 2. Remain on track for target production costs while meeting increasing customer demand.<\/p>\n 3. Add C5 and C10 molecules along with new products and customer agreements.<\/p>\n Business Model<\/p>\n Amyris partners with biofuel producers to build new, \u201cbolt-on\u201d facilities adjacent to existing mills, instead of building new \u201cgreenfield\u201d facilities, thereby reducing the capital required to establish and scale production, while simultaneously offering partners the opportunity to diversify and grow their product lines. Each of these steps in the production process \u2013 from the feedstock, through fermentation, to recovery and finishing \u2013 use processes that are already used by other industries today, enabling cost-effective scaling of production. Amyris\u2019s streamlined production process employs an innovative take on established infrastructure and allows for lower start-up and capital costs and more efficient processes. In addition, Amyris\u2019s partnership model incorporates cultivating long-term relationships with customers and co-developing ingredients with them to meet specific product development goals.<\/p>\n Competitive Edge:<\/p>\n Biofene provides a number of compelling advantages when compared to other renewable chemical and fuel alternatives, most notably that it is an oil. It can therefore be a drop-in replacement for many petroleum products, and it fits into the existing petroleum transport and distribution infrastructure. It is also an extremely flexible molecule that, with a few simple finishing steps, can replace petroleum derived chemicals in a number of markets, including ingredients in cosmetics, polymers, lubricants and consumer products, and renewable diesel and jet fuel. Amyris\u2019s technology has been designed to be feedstock-agnostic and its platform is extremely flexible; Biofene is just one of thousands of molecules that Amyris can produce.<\/p>\n Research, or Manufacturing Partnerships or Alliances: Amyris is a member of the National Advanced Biofuel Consortium under the Department of Energy (DOE) and NREL as well as a recipient of an Integrated Biorefinery (IBR) grant from the DOE. Amyris has ongoing research collaborations in Australia, Brazil and the U.S., and is a founding member of the Advanced Biofuel Association (ABFA), Biotechnology Industry Organization (BIO) and Diesel Technology Forum (DTF), among others. Amyris has manufacturing partnerships with Glycotech, Biomin, Sao Martinho, Tate & Lyle and Antibioticos.<\/p>\n","protected":false},"excerpt":{"rendered":" Company description: Amyris is a global renewable products company providing sustainable alternatives to a variety of non-renewable resources. Amyris uses its innovative bioscience technology to convert plant sugars into hydrocarbon molecules. Amyris creates ingredients and is commercializing its No Compromise products in the flavors and fragrances, cosmetics, specialty fluids, polymers, lubricants, and fuels industries. 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